“On one hand, we have an economy that is growing at just over 3.0 per cent per annum, low unemployment and a re-accelerating housing market,” Mr Lawless said.

“On the other hand, the RBA is confronted with a core inflation reading which is at a record low as well as the lowest wages growth on record.”

Mr Lawless said while the decision to hold rates was widely expected, the likelihood of a further rate cut later this year remains on the cards.

“If the June quarter inflation data, which is out a week before the RBA’s August board meeting, provides another weak reading, the chances of a rate cut in August are high,” he said.

“The turnaround in the pace of capital gains across the housing sector is likely to be a concern for the RBA.”

Mr Lawless noted that new CoreLogic data has revealed a 1.6 per cent rise in capital city home values last week, following a 1.7 per cent rise in April.

“The stronger housing market conditions have been enough to re-inflate the trend rate of growth which is something the RBA and the banking sector regulator are likely to be keeping a close eye on,” he said.

“Strong housing market conditions probably wouldn’t be enough to block a further rate cut, however ... if the renewed growth trend continues, there is the potential for a further regulatory response that could cool housing market demand while at the same time allowing monetary policy to stimulate the broader economy.”